On the heels of Florida's passage of 'milestone PIP reform' comes news that no-fault fraud is alive and well farther north.
In Allstate Insurance Company's second fraud-related lawsuit of 2012, the insurer seeks to recoup more than $6 million from four New Yorkers accused of fueling the state's rampant personal injury protection (PIP) fraud problem.
Implicated in the suit are a physician, a medical professional corporation, a management company, and an unlicensed layperson. The latter of the defendants is charged with using his management company to control at least one medical professional corporation.
In the complaint, Allstate seeks reimbursement for no-fault benefits it paid on behalf of its customers. The insurer asserts that the person who managed and secretly owned Staten Island-based Richmond Radiology, P.C. was neither a physician nor on the up-and-up. In addition to being unlicensed, the defendant reportedly shared proceeds of the companies' provision of professional services.
Such business practices represent a flagrant violation of New York law and preclude eligibility for no-fault reimbursement.
A State In Crisis
Allstate's special investigative unit (SIU) conducted the investigation that led to this complaint, which is the latest in a string of litigation aimed at protecting consumers and deterring would-be crooks. Since 2003, Allstate has filed 38 fraud lawsuits in New York in an effort to reclaim more than $207 million in damages.
Rampant abuse of the PIP system has plagued the state for years, driving up policyholders' premiums and chipping away at insurers' resources. Ultimately this crime costs New Yorkers millions of dollars each year, the Insurance Information Institute (I.I.I.) reports.
"In essence, honest, hardworking New Yorkers are paying a 'fraud tax,'" says Krista Conte, spokesperson for Allstate's New York office. "We need lawmakers to enact meaningful insurance reform that puts the citizens of New York first."
Allstate and the I.I.I. are joined by a slew of proponents lobbying for an overhaul of the PIP system.
Without the support of lawmakers, incidents of fraud will continue to increase," Conte adds. We need to work together this legislative session to fix the broken no-fault system."
Will New York consider a manuever similar to Florida's HB 119? Only time will tell.
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